Could the U.S. Dollar Retain Status As Global Reserve Currency?

The world has seen hot wars, cold wars, trade wars and currency wars and now the U.S. in a bid to retain its dominance in financial markets is embarking on a capital war with China, according to one researcher.

In an interview with Kitco News, Michael Howell, managing director at CrossBorder Capital and author of his new book Capital Wars, warned investors that they can expect to see higher volatility over the years as China challenges the U.S. reserve currency status.

Howell said that in this transition, the world is being carved into regions: a U.S. dollar zone and a nascent Chinese yuan zone. He added that market conditions have been exacerbated because of the COVID-19 pandemic. Central banks and governments around the world have been pumping liquidity into financial markets to support the global economy that has been devastated by the coronavirus.

He added that the fight for global financial dominance could happen even sooner than some are expecting because of the economic conditions. He said that if asked at the start of the year, he would have predicted China's dominance in 10 years; now, it might be within five years.